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The Future of Social Security and Medicare

Approximately 76 million Americans born between 1946 and 1964 are expected to retire in the next 28 years. In 2001 39 million Americans were enrolled in Medicare, and that number is expected to swell to 77 million in 2030. In 2001 35 million Americans were eligible to collect Social Security, while in 2030 more than 70 million will be eligible. The ratio between employed workers and Social Security recipients is expected to drop from 3.4 in 2001 to 2.1 in 2030.

These figures have alarmed both politicians and voters, who have demanded that something be done to save Social Security from a possible future of bankruptcy and chaos. Proposals to “fix” the system have varied from conservative efforts aimed at “privatizing” Social Security by allowing workers to invest their payroll deductions in the securities market to more liberal efforts aimed at placing Social Security funds in a “lock box” to keep them safe from tampering and theft.

Following the inauguration of George W. Bush as the 43rd President of the United States, Congress began debating the future of Social Security. In December of 2001 the Presidential Commission on Social Security put forward three proposals that would allow workers to invest varying portions of their payroll taxes in stocks and bonds. Comprised of 16 members handpicked by the White House, the commission disclosed that it would probably take $2 trillion to $3 trillion of new revenue to shore up Social Security for 75 years, money that could only come from increased borrowing, higher taxes, or spending cuts in other programs. It is now up to Congress and the president, members of the commission said, to make tough decisions about choosing among the approaches, apportioning the associated benefit cuts, and coming up with the trillions of dollars necessary to improve Social Security’s long term financial condition.


Inside The Future of Social Security and Medicare